We’ve entered the season of sustainability reporting, when companies release their latest summary of achievements and provide a peek into what’s on the horizon. What typically gets less attention in these reports is how a company focuses on certain issues and, more importantly, how they develop their sustainability strategy.
In many cases, companies use a materiality assessment to better understand the intersection of topics most important to stakeholders – inside and outside the company – as well as issues influencing future business success. This approach – considered best practice – highlights marketplace trends, uncovers emerging global issues and guides a company’s sustainability strategy, goals and reporting.
UPS has conducted regular materiality assessments since 2011 in partnership with BSR (formerly Business for Social Responsibility), a global nonprofit organization with expertise in sustainability and stakeholder engagement. UPS is headquartered in the U.S. but operates in more than 220 countries and territories.
As we establish our sustainability goals and review and renew them, it’s important to take a truly global view. Yet, by viewing the assessment through a predominantly U.S. lens, we missed crucial issues in communities outside the U.S.
With that in mind, we looked outward and conducted separate materiality assessments in 2015 for five key business regions, including Europe, our largest market outside the U.S. and one of our biggest growth markets.
Tapping into values
The exercise affirmed the local importance of some global issues we’ve been working on for decades, such as mitigating climate change and reducing emissions. It also illuminated new topics of regional importance. For instance, air pollution and congestion are especially important in Europe, where cities are getting more crowded every day.
Supplier engagement also surfaced as a key topic since outside service providers – vendors who pick up and deliver packages on behalf of UPS – constitute a large portion of our operations in Europe.
The insights were instructive as we developed a regional sustainability strategy to address key issues in Europe and around the world. Some of the initiatives include:
- Establishing a goal to reduce absolute greenhouse gas emissions 12 percent across our global ground operations by 2025. We announced the goal in our latest Sustainability Report, along with renewable energy targets that will drive investments in fuels, technologies and infrastructure.
- Collaborating with Dublin City Council earlier this month to launch the Low Impact City Logistics initiative. Aiming to reduce congestion and pollution, the initiative includes an urban package container that serves as a mini distribution hub in the city center, from which packages are delivered by alternative transport solutions such as electric tricycles. A similar project is up and running in Hamburg, Germany, and UPS is testing inner-city bicycle deliveries in several European cities.
- Continued expansion of the UPS Access Point network, which makes urban deliveries more efficient and reduces the need for a driver to make return visits when customers are not home. With more than 16,000 locations in 15 European countries, a study done by the Flanders Institute for Logistics shows this model can reduce carbon emissions for packages by 60 percent if consumers retrieve their parcel by car – and by 81 percent if they retrieve their parcel on foot.
- Collaborating with suppliers in Italy and France to help them operate more sustainably. We’ve partnered with select suppliers to optimize daily routes, reduce the number of package cars on the roads and limit distance driven. These efforts help reduce fuel consumption and costs for both the suppliers and UPS.
A matter of priorities
These are just a few examples of how the materiality assessment can help companies prioritize resources and address topics most important to the business and stakeholders.
These findings illustrate how a sustainability strategy can create the most value as a company navigates the complex landscape of global and local issues.
Companies no longer have to guess about whether they’re doing the most good. It brings certainty to an uncertain process while improving the communities where we live and do business.
That’s a strategy worth getting behind.